Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: West Virginia AG reaches hospital merger agreement, (Aug 4, 2015)

By Greg Hammond, J.D.

West Virginia Attorney General Patrick Morrisey has agreed to support Cabell Huntington Hospital, Inc.’s acquisition of St. Mary’s Medical Center, in exchange for meeting certain conditions. The agreement was crafted to ensure that the acquisition complies with the West Virginia Antitrust Act, as well as the Sherman Act and other state and federal laws (In the Matter of Cabell Huntington Hospital, Inc.’s Acquisition of St. Mary’s Medical Center, Dkt. 15-C-542).

“This acquisition represents the combination of two large and vitally important health care centers in the greater Huntington area,” Attorney General Morrisey stated. “St. Mary’s Medical Center and Cabell Huntington Hospital represent the seventh and eleventh largest private employers in the state, respectively, and the top two employers in Cabell County. Serving residents of three states, the combined hospital company would represent the second-largest hospital chain in the state.”

According to the terms of the agreement: (1) St. Mary’s will be maintained as a free-standing, general acute care, faith-based organization for a seven-year period; (2) the hospitals will not increase their service rates beyond the West Virginia Health Care Authority’s benchmark rate; (3) If the combined operating margins exceed the average of 4 percent during any three-year period, the hospitals’ rates will be reduced by the amount of excess for the following three years; (4) the hospitals will release employees from any non-compete agreements following termination of their employment; (5) the hospitals will maintain open staffs and grant privileges to all qualified physicians, and not terminate privileges to those who start offering services in competition to the hospitals; and (6) the hospitals will not oppose the award of a certificate of need by the state Health Care Authority to any health care provider that seeks to provide services in their market area. The hospitals will take additional steps to improve access and enhance the quality of health care.

Attorney General Morrisey, in return, has agreed to support Cabell Huntington’s acquisition of St. Mary’s, and has further agreed to communicate its support to the FTC, which is also reviewing the transaction.

“Unfortunately, with the recent increased federal regulation in the health care industry, the trend of hospital consolidation will likely increase over the coming years as hospitals struggle to deal with the increased costs of regulation,” Morrisey said. “However, I believe given the conditions negotiated in our agreement, the best interests of our citizens will be protected.”

Companies: Cabell Huntington Hospital Inc.; St. Mary’s Medical Center

News: AcquisitionsMergers Antitrust